Sept. 28 (Bloomberg) -- The U.S. government lurched toward
a partial shutdown Oct. 1 as House Republicans planned to attach
a delay of Obamacare to a bill to keep the government open and
Senate Democrats said they will reject the proposal.

The House is poised to vote tonight in Washington to delay
portions of Obamacare for a year and repeal a medical device tax
as part of a plan to extend government funding through Dec. 15.
That’s a position party leaders resisted two weeks ago, until a
few dozen Tea Party-backed lawmakers pulled them to the hard-line stance.

“Republicans have tried and failed to defund or delay the
health care law more than 40 times, and they know this demand is
reckless and irresponsible,” Jay Carney, the White House press
secretary, said in a statement today. “Any member of the
Republican Party who votes for this bill is voting for a
shutdown.”

The developments dramatically raise the likelihood of a
shutdown. The fiscal year ends Sept. 30, and the policy divide
is wide, because congressional Democrats and President Barack
Obama say they won’t accept any of the conditions Republicans
are uniting around.

“The American people don’t want a government shutdown and
they don’t want Obamacare,” House Speaker John Boehner and
other Republican leaders said in a statement today. “We will do
our job and send this bill over, and then it’s up to the Senate
to pass it and stop a government shutdown.”

Military Pay

House Republicans plan to pass a separate bill to ensure
that U.S. troops, along with some civilians and contractors who
work for the military, are paid if the government shuts down.
The House began debating the spending issue just before 8 p.m.
Washington time, with a final vote set for later tonight.

Budget brinkmanship has become routine in Washington,
particularly since Republicans gained control of the House in
the 2010 election. A last-minute deal before Oct. 1 is still
achievable, and one possible move is for both chambers to pass a
short-term funding measure -- for a few days to a week -- to
keep the government open and leave more time for debate.

The House Republican leadership doesn’t expect to pass a
clean spending bill or have enough Republicans who would want to
do that, according to a leadership aide who spoke on condition
of anonymity to discuss party strategy.

Government Contribution

The House probably will amend the spending bill one more
time. A likely option would eliminate the government’s
contribution to the health insurance of members of Congress and
staff, as a way of testing Democrats’ willingness to make any
change to the health law, the aide said.

Right now, there is no desire or plan for a one-week
extension of funding, the aide said.

Many Senate Democrats oppose the medical device tax, and a
repeal garnered a 79-20 vote earlier this year. That doesn’t
mean they want to attach it to the spending bill. The leading
Senate advocate, Democrat Amy Klobuchar of Minnesota, rejected
the idea this week.

“We continue to be willing to debate these issues in a
calm and rational atmosphere,” Senate Majority Leader Harry
Reid said in a statement today that called the Republican plan
“pointless.” He added, “The American people will not be
extorted by Tea Party anarchists.”

The Senate yesterday passed a bill that would fund the
government through Nov. 15, omitting Republican language to
choke off funds for the 2010 health-care law.

Senate Response

Reid yesterday warned that House revisions to the spending
bill would lead to a shutdown. A Senate Democratic aide who
spoke on condition of anonymity said it was unlikely the Senate
would return before Sept. 30 to consider the House plan.

The Senate could reject the House’s amendments and send the
bill without the Obamacare-delay provisions back to the House
with hours remaining before a shutdown.

“Let’s keep this government running,” Democratic Senator
Mark Begich of Alaska, who is up for re-election in 2014, said
yesterday. “Look at the markets the last few days. The
shenanigans they’re playing are causing the markets to falter
and that’s bad for the economy and bad for jobs.”

Concerns that the budget impasse will hurt economic growth
helped push the Standard & Poor’s 500 Index to its first weekly
decline since August. The index fell 0.4 percent to 1,691.75
yesterday, and dropped 1.1 percent for the week. The rate on 10-year Treasury notes fell three basis points to 2.62 percent
yesterday.

Economic Growth

A shutdown could reduce fourth-quarter economic growth by
as much as 1.4 percentage points, depending on its duration,
according to economists. The biggest effect would come from the
output lost from furloughed workers.

Even if Congress resolves the spending fight, lawmakers
would immediately move to the next fiscal dispute over raising
the $16.7 trillion debt ceiling. Unless Congress acts, the U.S.
won’t have enough money to pay all of its bills at some point
between Oct. 22 and Oct. 31, according to the Congressional
Budget Office.

House Republicans have voted more than 40 times to delay,
defund or repeal all or part of the 2010 health-care law, which
is designed to expand coverage to at least 30 million people.
Some of the narrower proposals became law. The U.S. Supreme
Court upheld the law in June 2012.

Sharp Turn

Today’s move marks a sharp turn for Boehner and Republican
leaders, who earlier this month tried to pass a plan that would
have let the Senate strip out anti-Obamacare language and send
the spending bill directly to Obama.

The proposal under consideration today would delay the
individual mandate along with many taxes and fees from the
health law. It’s based on a proposal from Representative Marsha
Blackburn, a Tennessee Republican.

“It’s exactly what we asked for and we got it,” said
Republican Representative Michele Bachmann of Minnesota.

Republicans, torn by internal strategic and policy
disputes, are choosing to make their stand against the health
law. The first insurance exchanges open Oct. 1 and other
portions of the law already have taken effect.

‘A Jerk’

“Harry Reid has been a jerk, and I think he’s done nothing
but unify the Republican House, saying ‘Look, we’re going to do
what’s right,’” said Representative David Schweikert, an
Arizona Republican.

At the White House, Obama accused House Republicans of
“political grandstanding” that has hurt economic growth. He
urged Congress to work together to pass a spending plan and then
adopt legislation to increase the nation’s borrowing authority.

“Do not shut down the government. Do not shut down the
economy,” Obama said yesterday. “Pass a budget on time. Pay
our bills on time. Refocus on the everyday concerns of the
American people.”

Republicans have been infuriated by Obama’s unwillingness
to negotiate, pointing to his conversation yesterday with
Iranian President Hassan Rouhani.

“It’s really interesting that the Democrats are willing to
negotiate with Iran,” said Representative Richard Hudson, a
North Carolina Republican. “But they won’t negotiate with us.”

In a government shutdown, essential operations and programs
financed with permanent streams of money would continue, meaning
that Social Security checks would be delivered and military
personnel would still work. National parks, Internal Revenue
Service call centers and passport offices are among the federal
facilities that could close.